Insurers Are Really Mad at Sovaldi, the $1,000-a-Day Miracle Drug

In December 2013, the FDA approved Sovaldi a drug developed by Gilead Sciences that promises to do wonders for patients with hepatitis C.

In December 2013, the FDA approved Sovaldi a drug developed by Gilead Sciences that promises to do wonders for patients with hepatitis C. Since then, insurers and the government have grown incredibly angry and frustrated with the company.

Sovaldi is a revolutionary advance that promises to cure 90% of targeted patients. Without this treatment, patients could develop liver cancer or require liver transplants. The FDA has said "it is the first drug that has demonstrated safety and efficacy to treat certain types of HCV infection without the need for co-administration of interferon." It was granted the FDA's coveted Breakthrough Therapy Designation, becoming approved in under a year. Director of the Office of Antimicrobial Products at the FDA's Center of Drug Evaluation and Research, Edward Cox, M.D., believes Sovaldi is life changing: “[Sovaldi's] approval represents a significant shift in the treatment paradigm for some patients with chronic hepatitis C.” 

Yet, insurers cannot stand this life saving, revolutionary medication. That's because it runs $1,000 a day and the average patient requires a 12-week treatment of Sovaldi. That's $84,000 for one cycle. For patients with a strain that is more difficult to treat, the regiment is 24 weeks. That comes in at $168,000. It is projected to rake it between $5 billion and $9 billion in profits in the United States this year alone. There are an estimated 4 million Americans with Hepatitis C, and 15,000 are killed each year by untreated chronic infections.

Unfortunately, there is not much insurers can do about the price. A comparable drug is not yet on the market. The most similar medication, Incivek, runs $68,000 for  12-week course, but it is much less effective. Comparatively, Sovaldi is still much cheaper than the next-best alternative: a liver transplant. Transplant surgery runs at least $175,000 per patient, not including complications and other associated costs. Additionally, the risks of surgery are far greater than the drug: the body can reject a transplant, it is major surgery, and the recovery time is much longer. There is also a wait list, and a hepatitis C patient may not be eligible for a liver in time.

Gilead Sciences believes the focus is in all the wrong places. "[Critics] have focused on the per-pill cost or per-bottle cost, but that is really not relevant here. It's how much it costs to cure your patient," said Gregg Alton, Gilead's executive vice president of corporate and medical affairs. 

Regardless, insurers are battling to lower the cost of the drug. Molina Healthcare, which is set to see earnings decline by 18 percent if (though more realistically, when) the drug reaches $6 billion in sales, is trying to limit which patients have access to the treatment. Mario J. Molina, chief executive of Molina Healthcare gave this statement: “If you’ve got a patient who is advanced and has liver disease and is about to get a liver transplant, it makes sense to give treatment. [W]hat do we do about everybody else? If everyone in the U.S. with hepatitis C were treated with Sovaldi at its list price, it would cost $227 billion compared with the estimated $260 billion spent a year in the country for all drugs.”

Express Scripts is working with doctors to determine which customers can be put on a wait list until a rival, and presumably less expensive, drug is available.

Representative Henry Waxman has taken direct aim at Gilead Sciences as well. In a public letter sent March, 20th, Waxman questioned the pricing: "Our concern is that a treatment will not cure patients if they cannot afford it. [...] According to a recent Reuters report, 'many doctors are requesting a $150,000 combination of Sovaldi ... and Olysio. These costs are likely to be too high for many patients, both those with public insurance and those with private insurance."

Waxman also tackles the socioeconomic role of hepatitis C: "Because Hepatitis C is 'concentrated in low-income, minority patients,' the affordability problems are likely to be particularly acute for state Medicaid programs and those patients served by these programs." Molina manages Medicaid programs for a number of states, a factor is directly related to its projected 18 percent profit decline.

Gilead is well aware of the situation, and is handling it with kid gloves: “We had heard the concerns raised in the letter and had reached out to a number of members of Congress prior to this letter to address those concerns. We have been working with a number of stakeholders, including federal and state officials, to share the scientific and medical evidence.” But they faced this situation before, as activists have protested the exorbitant pricing of their HIV-treatment Striblid.

No one wants to be accused of price gouging sick people, but the insurance companies also don't want to be accused of trading lives to cut costs. Gilead representatives will meet with Waxman and others on April 3 to discuss the problem.